Should I Be My Own Registered Agent? 6 Reasons Why Not

Forming a limited liability company or corporation is an excellent way to protect your business and safeguard your personal assets. But you need a registered agent—there's no way around this requirement. Legally, you can be your own registered agent in most states, but there’s a catch. This decision might present unintended consequences, like having to be present at your business location during normal business hours, extra paperwork, and compromised privacy. 

Learn what a registered agent does and understand why outsourcing this responsibility to a professional registered agent service is the best move forward.

What is a registered agent for an LLC? 

A registered agent, also known as a statutory agent or resident agent, is a person or agency your company appoints to receive official important documents on your business's behalf. This includes legal notices, service of process, correspondence with the state, and important notices about state and federal taxes.

The agent for service of process can be anyone—the business owner, family member, an employee, or an outside person or service hired to fulfill the role.

Key responsibilities of the listed registered agent are to:

• Be available during standard business hours.
• Accept service of process documents, such as subpoenas, alongside other official notifications.
• Notify and forward legal documents to the business owner.

These responsibilities may result in extra fees:

• Assist in filing of annual reports and other compliance paperwork.
• Keep accurate records of all business-related paperwork, including business licenses, to remain in good standing with state laws.
• Advise on state tax deadlines.

Registered agents are particularly important for small business owners that are not based in a state where they are doing business (for example, you're located in New York but also sell things or provide services in New Jersey). There must be a way to contact the company for important correspondence, and a designated registered agent is the way to do so.

Requirements to be a registered agent

In the majority of states, it's legally acceptable to be your own registered agent for your LLC if you meet the following requirements: 

• Are above the age of 18.
• Have a physical address in the state (not a P.O. box).
• Officially reside in the state.
• Are available during regular business hours (9 a.m.-5 p.m.) at the designated physical location.

But, some states may have unique rules. For instance, California's state law 1505 doesn't allow a business entity to list itself as a service of process agent unless it's in good standing with the state. In New York, the Secretary of State Division of Corporation is automatically the default registered agent for limited liability companies and domestic and foreign corporations.

6 reasons you shouldn’t be your own registered agent 

We can understand why being your own registered agent over hiring a registered agent is appealing. Listing yourself as your business's registered agent can save costs because registered agent services can easily add $100-$300 to your business expenses.

Being your own registered agent allows you to retain more control of a company's operations, especially tax documents and legal documents, as no one else is privy to your financial statements or annual report filings. 

However, many small business owners oversimplify the responsibility of being a registered agent for their business entity. A professional service provides organized record keeping, privacy, reliability, multi-state compliance expertise, and flexibility. Let's take a closer look at six reasons why you shouldn't appoint yourself as a registered agent. 

1. Sharing your address

When you file your business formation paperwork with the Secretary of State, you are required to give the registered agent's name and address. Once this paperwork is filed, the registered agent's address and name are now part of public records.

 If you are running your business from home or your business doesn't have a traditional public-facing office, having your home's physical address or business address as part of public records can compromise your privacy. This might not concern you now, but maybe you don't want your home address for public eyes five to 10 years down the line. 

 If you hire a registered agent service, the address of the company you've hired will become the public address of your company, shielding your privacy.

2. More mail to process

If you plan on being your registered agent, you may have to use your home address (particularly if you have a home-based or web-based business), which will make the address public. In addition to the privacy issues mentioned above, making your address public can also lead to an uptick in the amount of junk mail you receive. Processing this extra mail can be overwhelming. 

More importantly, legal notices can get lost in the shuffle. By hiring a registered agent service, you have someone who can sort through your mail, get rid of the junk, and ensure that you are given important documents promptly.

Using a registered agent service also avoids having a process server or angry litigant come to your home to serve you with notice of a lawsuit, something you may not want to deal with at home.

3. Address change notices must be made promptly

If you're planning on moving or relocating your business location, you may wonder: Can I be my own registered agent? Moving or relocating means you would need to notify the state of each address change, which can be time-consuming. You will likely also need to pay a fee for each notification of an address change.

When you add up those fees, which for each state can range between $0-$50, and consider the time involved in handling address changes with the state, hiring a registered agent may be simpler and possibly less expensive.

4. Agents are required to keep regular business hours

Registered agents need to have regular business hours to accept service of process. This can be difficult for small business owners who often cannot stay in an office all day and cannot afford to hire full-time employees to work out of a specific location. 

It could also pose a challenge for businesses with irregular operating hours, such as a bar owner who probably works late into the night. They will find themselves having to be back at the bar early in the morning. 

Hiring a registered agent means someone is always available to accept and forward documents, leaving you free to set your hours and run your business instead of waiting for the mail to arrive. 

5. You must have an agent in every state

You need to designate a registered agent in every state that you are registered or licensed to conduct business in. Maintaining a physical address through a brick-and-mortar location for your company across multiple states would be costly.

Many registered agent services have an established network of commercial registered agents across the U.S., providing comprehensive coverage. If you hire a registered agent service, you can easily maintain an agent in every state without hiring employees or maintaining a physical location where you are conducting business.

6. You never want to miss an important notice

A registered agent is an expert in dealing with legal documents. They are familiar with state-specific laws and compliance requirements, which can be labor-intensive and confusing. The agent's job is to inform you if and when compliance procedures change.

They also know how to organize and track paperwork and provide advice on things you need to do to keep your limited liability company in compliance. You don't have to waste your time trying to keep all dates in place. The registered agent will tell you when taxes, annual reports, and license and permit renewals are due.

Let's not forget that missing legal notices or failing to respond in a timely manner can result in financial penalties, loss of your Certificate of Good Standing, or default judgments against your company.

FAQs

Do I need a registered agent for my LLC?

Yes, most states mandate having a designated registered agent as part of your formation paperwork. Don't list one, and your filing can get rejected. States mandate having a registered agent because it gives courts an easy and reliable way to contact you. If someone files a lawsuit against your firm, the case can't proceed without a formal notification.

A registered agent requirement also promotes transparency as there's a clear point of contact. This prevents large companies from hiding behind their employees.

Should I be my own registered agent for an LLC?

You can, but it’s wise not to be. It's a time-consuming administrative role that takes away from running your business, meeting customers, and driving growth. For a person operating their business from home, it makes your home address a part of permanent public records. Furthermore, the role requires knowledge on how to deal with legal paperwork.

Paying a fee each year for registered agent services so that you have an agent for service of process and other notices can be well worth the time you will save in trying to keep track of official notices and annual report deadlines and ensuring you're sorting and reading your mail.

How much does a registered agent cost?

The cost of hiring a registered agent service starts at approximately $35 and can go up to $300. The final number depends on level of service, features provided, and reputation of the provider. For instance, an established company that has coverage across all 50 states, offers digital storage of important documents, and mail forwarding, is likely to charge a higher fee for their services. 

Some business formation companies provide free registered agent services as part of a package. This is an ideal way to save money and protect your business from liabilities on a budget. 

Can I change my registered agent?

Yes, you can change the name and address of the registered agent. The cost and legal process for changing registered agent information does vary by state. In Arkansas, it's free to change your appointed registered agent's details. You just need to submit a completed Notice of Change of Registered Agent information form to the state office. Florida charges $25 and $35 to change registered agents for LLCs and corporations, respectively.

How can I find a registered agent service?

While you can perform a quick Google search to find a registered agent company within your state, do not assume all third-party agents offer the same quality of service or expertise. Read customer reviews, ask for referrals from other small businesses, and study the company's history. Also, check to see if the provider has the authority to provide registered agent services across multiple states before signing up with one. 

Brette Sember, J.D., contributed to this article.